Chapter 4 Overview
Notes
Finances, whether with bank accounts, credit cards, loans,
investments, or taxes, affects most people’s daily routines.
In this chapter we
Budget for personal finance.
Investigate compounding interest.
View savings and investments.
View loans, credit cards, and mortgages.
(Math 1030)
M 1030 §4A
1 / 10
4A Checklist
Notes
Understand controlling personal finance.
Make a budget and compute cash flow.
(Math 1030)
M 1030 §4A
2 / 10
Assignment
Notes
Assignment: For Unit 4A,
1. p 204 - 205 Quick Quiz
2. p 205 - 207 Excercises 14, 15, 18, 23, 32, 38, 39, 41,
52
Unit 4B will also be discussed today.
(Math 1030)
M 1030 §4A
3 / 10
4A Key Words
Notes
Budget A means of tracking how much money comes
in and how much goes out.
Cash flow The difference of the total income and
total expenses. This is a net value, and can be
positive or negative, or zero.
(Math 1030)
M 1030 §4A
4 / 10
Budgets - Unit 4A
Notes
Making a personal budget tracks how much money you
have coming in and going out. The cash flow is the
difference. Based of the cash flow, you can decide what
adjustments need to be made.
Example: A credit cards bills an interest rate of 2% per
month. At a steady monthly balance of $1100, how much
money is spent on credit card interest?
What is this value as a monthly expense? How does it
compare to an annual expense?
(Math 1030)
M 1030 §4A
5 / 10
Budgets
Notes
Example: In addition to other monthly expenses, college
expenses are paid twice a year. Tuition is paid $4000 for
each semester, with $500 in student fees each semester,
and $600 for textbooks each semester. How should you
handle these expenses in computing a monthly budget?
(Math 1030)
M 1030 §4A
6 / 10
Budgets
Notes
Anne is creating a budget. She pays monthly expenses are
$700 for rent, $120 for gas for her car, $140 for health
insurance, $75 for auto insurance, $25 for renters’
insurance, $110 for her cell phone, $100 for utilities,
about $300 for groceries, and about $250 for
entertainment and eating out. She pays each year $12,000
for college expenses, about $1000 for gifts, about $1500
for vacations, $800 for clothing, and $600 for charity. Her
income is a monthly wage of $1600, and she receives a
scholarship of $3000 at the beginning of the school year.
Find her total monthly cash flow.
(Math 1030)
M 1030 §4A
7 / 10
Budgets
Notes
Monthly income: $1600 + $3000 / 12 = $1600 + $250
= $1850.
Monthly expense: $700 + $120 + $140 + $75 + $25 +
$110 + $100 + $300 + $250 + $12000/12 + $1000/12
+ $1500/12 + $800/12 + $600/12 = $1820 + $1325 =
$3145
Cash Flow: $1850 - $3145 = - $1295.
(Math 1030)
M 1030 §4A
8 / 10
Budgets
Notes
Are there any expenses on your personal expenses not on
Anne’s list?
What plan would make sense for you for your personal
finances?
Many decisions depend on circumstances, but be sure to
figure out how your expenditures will be affected over the
long run.
(Math 1030)
M 1030 §4A
9 / 10
Long Term Investment
Notes
Jorge commutes to his job and to school, driving a total
of 250 miles per week. He spending $1800 per year on car
repairs and it gets 18 miles to the gallon. A new hybrid
costs $25,000, gets 54 miles to the gallon, and is
maintance-free for about five years. How do the two long
term expenditures compare over five years?
(Math 1030)
M 1030 §4A
10 / 10
Notes
Notes